Small Businesses and the CARES Act PPP Assistance
In addition to aid provided to individuals and families, the CARES Act offers significant assistance to small businesses and nonprofits. Included in the federal aid package is $349 billion for the Paycheck Protection Program (PPP), which is earmarked for loans to small businesses, including nonprofits, to cover costs associated with maintaining their workforce.This program will allow businesses that have been affected by COVID-19’s impact on local economies to borrow money for expenses such as payroll costs, health care benefits, employee compensation for workers who earn up to $100,000 annually, mortgage interest obligations, rent and utilities, and interest on debt incurred.
To be eligible for the PPP, the entity must be a small business, 501(c)(3) organization, a 501(c)(19) veterans organization, or tribal business concern with not more than 500 employees. Larger companies are also eligible if their size standard for the industry meets Small Business Administration (SBA) guidelines. Qualified small businesses will be eligible for a loan up to an amount equivalent to 250 percent of the employer’s average payroll costs or $10 million, whichever is less. Unlike other federal loans administered by the SBA, eligibility will also be determined by whether a business was in operation on February 15, 2020 and had employees on its payroll rather than repayment ability.
As of April 16, 2020, the PPP had exhausted the funds set aside to support small businesses. In Table 1 below, the Guinn Center presents SBA PPP program data for each state. Specifically, we report: (1) Number of PPP loans received by each state, (2) Number of small businesses in each state, (3) Percentage of small businesses that received PPP loans, (4) Approved PPP dollars, and (5) Average size of PPP loan per business. In Table 2, the Guinn Center examines data for states with similar numbers of small businesses. As the data reveals, the percentage of small businesses in Nevada that received a PPP loan was significantly smaller than states with similar numbers of small businesses.
Table 2. Comparative PPP Loan Data, by States with Similar Numbers of Small Businesses